Renting or Owning: What Should You Consider?
What are the differences between a tenant and a landlord? Besides financial considerations, there are many other factors that can influence your decision.
Is it better to be a tenant or a landlord? There are no right or wrong answers to this question! The advantages and disadvantages of both situations will vary depending on your lifestyle. Besides financial considerations, there are many other factors that can influence your decision, so read on to help you make the right decision for your lifestyle.
1. What are the advantages of renting?
Freedom is at the top of the benefits of renting: this is an important factor to consider if you like to travel with peace of mind!
- Moreover, renters’ responsibilities are generally less important:
- Financial expenses are lower since there is no mortgage to pay
- Rent is generally lower than the cost of an apartment
- The owner of the building is responsible for major repairs
- Rising real estate prices have little effect on rental costs
However, as a tenant, you will have difficulty carrying out renovations in your apartment unless you have previously obtained the landlord’s consent. In addition, the landlord is free to repossess the unit at the end of the lease or to increase the rent, which could result in an unscheduled relocation.
2. What are the principal differences involved in becoming a homeowner?
By becoming a homeowner, you will no longer have to pay a monthly rent: a source of great comfort for many buyers. However, by acquiring a property that is entirely your own, you will have to pay off a mortgage loan.
Unlike paying rent, you will be able to
adjust your monthly payments according to your financial situation and your
In addition, the purchase of a property will allow you to benefit from stability, without being exposed to the uncertainties of a landlord’s decisions. You will also own an asset that has the potential to contribute to your financial wealth.
3. What are the responsibilities of a landlord?
When you buy your first home, the expression “Home Sweet Home” will no doubt take on a new meaning! However, this change of circumstances will most certainly bring with it a number of new responsibilities, such as
- The evaluation of your borrowing capacity
- Saving for the down payment
- Paying off the loan and mortgage interest
- Payment of mortgage loan insurance (CMHC)
- Payment of certain taxes (welcome tax, property tax and school tax)
What do all these elements have in common? Risk tolerance. You can’t predict whether interest rates will increase your mortgage payments or whether tax changes will affect your personal situation. To evaluate the best choice for your lifestyle, don’t hesitate to consult your financial advisor and a mortgage broker.
4. Other costs to consider when becoming a homeowner
In addition to mortgage payments, there are additional expenses associated with the purchase of a property, including
- Pre-purchase inspection fees
- Notary fees
- Condominium fees (only in some cases)
- Maintenance costs (landscaping, windows, roof, water heater, etc.)
- Generally higher energy costs
- Renovation costs (kitchen, bathroom, flooring, etc.)
In addition, the city or neighbourhood in
which your property is located can have a major impact on its purchase price
and value. For more information on this subject, consult the article How to Choose Your Future Neighbourhood.
Finally, contrary to what many buyers might think, considering your home an investment is not necessarily a sound choice from a financial standpoint. Keep in mind that your housing costs should not exceed 30% of your gross household income. All in all, take the time to evaluate your needs and your lifestyle to determine whether it is more advantageous for you to rent or to own.See also: